Post Secondary Funding, Time for Something Completely Different?

Post Secondary Funding, Time for Something Completely Different?

With the latest round of negotiations on university tuition and post secondary funding now underway it is an ideal time to consider the three basic truths that appear to drive our collective decision making about post-secondary funding. We all appear to accept as a given that government sets tuition fees, schools are not businesses, and supporting institutions is the same as supporting students. None of these things are, in fact, true.

Does government set tuition fees? Absolutely not. The institutions set their fees based on the cost of delivering their services and the revenue needed to offset those costs. If government set tuition fees there would be no need for negotiation. So, if government doesn’t set the fees, then that must mean that it isn’t only government that can lower them. Exactly, as I just said, the fees are based on recovering the cost of delivering the services – lower the costs, lower the fees.

Is it that easy? After all, we all know post-secondary schools really are not businesses. Or are they? They have capital assets and human resources which they apply in the delivery of a service for which they receive a fee. They can even earn a profit although they would call it retained earnings, or an accumulated surplus, or some other less capitalist sounding term.

They have even gone to a lot of trouble over the years to make the business case that they add value to the economy. They train our people (young and old), give them marketable skills and allow them to expand their earning potential. They also have trickle down effects in terms of their own employment, their local consumption and the value of the research they do (which both increases the stock of human knowledge and creates opportunities for new commercial products).

Of course, you can make the same argument, to one degree or another, for every corporation in the region. Does this mean we should be covering all corporate operating costs in the same way we support universities and community colleges? No. But it does mean we need to take a serious look at the real reason we support post secondary institutions at the high level we do, and it has nothing to do with their economic impact. (If they want subsidies because of their economic impact they should follow the same rules as other businesses, but don’t get me started about subsidies.)

We give massive amounts of cash to post secondary institutions in order to support the students who go there. As a society we believe that all of our children should have access to the best possible education. We do this for two reasons, one altruistic, the other selfish. On the one hand, we have built a society based on the concepts of equality and opportunity; on the other, the more successful future generations are, the better able they will be to keep us in the style to which we have become accustomed. It is a sound and fair deal all around.

So, if we fund post-secondary education at the level we do solely to benefit the students then I say we need to stop the negotiations on enriching our current model of funding institutions and start the negotiations on how we can equitably fund students directly.

Here is a suggestion. Take our current post-secondary budget and give it all to the students in the form of an enriched student loan program, expanded bursaries and grants, debt relief and, if you must, study incentives in fields where we have a demonstrable skills shortage. Let them spend the money inside and outside Nova Scotia to secure the best education that fits their interests and abilities.

Certainly we will have to make some income contingent adjustments in order to keep purchasing power equal (giving more money to students who simply don’t need it is wanton and wasteful). We could also make some allowances for encouraging local consumption, if we wanted to, but we should remember that studying close to home offers other benefits that should not be understated. And, of course, we would need to allow for some transitional adjustments as we wean our institutions off their addiction to government cash and introduce them to true consumer accountability

As for Nova Scotia’s post secondary institutions, their challenge will be to attract those local students, and other students, to pay whatever fees they can justify based on the product they are selling. They have their favourable tax status. They have access to multiple public infrastructure programs. They have access to private capital and the capital markets. They have the ability to deliver competitive, effective and high quality programs that meet the needs of today’s economy. They will fill their classrooms. And if they can’t, then clearly we should not have been subsidizing them in the first place.

Charles Cirtwill is the acting President of the Atlantic Institute for Market Studies, a non-partisan public policy think tank based in Halifax.